Climate Change Questions Kyoto Kyoto Protocol Protocol Target Target • Why did U S U S agree to a target that is much tougher than the one President Clinton proposed proposed in in October October • Since the Protocol can be amended by 3 4 of the parties including developing countries won't won’t developing countries perhaps with help from countries such as the EU be able to amend our target and make it even more stringent • Did the Vice President's U S -President’s visit -- with his call for greater flexibility on the U S side — diminish your negotiating leverage and help lead to the cave-in of our position of 1990 levels by 2008-2012 Bubble • If the EU Bubble gives them an advantage as Undersecretary Eizenstat admitted to congressional observers why did the U S U S agree to it Emissions trading • You claim that getting emissions trading was a great achievement and you base much of your economic case -won't be too costly -— that this agreement won’t — on trading But the protocol includes only the most general concept of trading without the principles in your January 1997 proposal Haven't Haven’t we lost our leverage by signing onto a binding target and timetable without achieving the specifics on emissions trading • In the absence of more detail you can't can’t really have any confidence in how a trading system will work For example you don't don’t even know how much of our target will be able to be satisfied through trading do you • You don't don’t know how trading will be monitored verified or administered do you • Can you explain how the system will work if some countries have domestic trading as is anticipated here and others such as the EU do not Will U S companies trade with foreign countries Will our trades have to be made through the government • Doesn't Doesn’t our whole plan to reduce our costs through trading really amount to a plan to transfer billions of dollars to Russia in return for excess Russian emission rights • And isn't isn’t it true that those excess Russian emission rights result not from any positive actions the Russians have taken to reduce greenhouse gas emissions or clean up their environment but simply because their economy collapsed shortly after 1990 driving down their demand for energy • So in effect isn't isn’t this whole trading business a sham We pay the Russians to satisfy a target that is too tough on us and not tough enough on them our economy is hurt and the environment doesn't aren't actually taking any doesn’t get helped at all because the Russians aren’t significant action to help the environment Isn’t Isn't that right‘d right' Umbrella • You've -- an You’ve talked about setting up a potential trading block of countries outside the EU umbrella to counter their bubble How would the umbrella work Would you intend to limit trading to countries within the umbrella Is that legal Do you think setting up such a block that excluded the EU makes good sense from a broader foreign policy perspective perspective Clean Development Mechanism • As in the case of emissions trading you are claiming the Clean Development Mechanism as as aa big big success success and and as as aa key key element element in in keeping keeping costs down for for American business but once again the Protocol only includes the general concept with no clear outline of how it would by signing onto aa binding binding target target and and timetable timetable would work work Haven't Haven’t we we lost lost our our leverage leverage by signing onto without achieving the specifics on joint implementation •• Can COM would work Can you you describe describe in in some some detail detail how how the the CDM • nation's target that can be met through the CDM COM The Protocol indicates that the part of a nation’s will be determined by a later Meeting of the Parties So it is possible that the ability of our isn't it our companies companies to to use use the the COM CDM to to meet meet our target will be very restricted isn’t If it is very restricted will we walk away from the deal Wouldn’t Wouldn't it be foolhardy to sign the Protocol before we know how restricted our ability to use the COM CDM is going to be •• How How will will the the COM CDM be be financed financed • How big a share of the proceeds will be devoted to assisting developing countries with adjustments to climate change -— 5% 20% 50% Do we really have any idea Who decides • The to press press for for aa compensation compensation fund fund so that we we The OPEC OPEC countries countries actually actually had had the the nerve nerve to so that would have to pay them to make up for the reduced use of oil that is likely to result from an effort to cut greenhouse gases We opposed that demand couldn’t couldn't these proceeds end up being applied at least in part to pay off OPEC countries up being applied at least in part to pay off OPEC countries • Since projects under the COM CDM will be done in developing countries that do not have emissions budgets who will monitor and verify that the reductions from a given project are real If credits were given for reductions that would have occurred anyway then the COM CDM into another environmental sham couldn't it That is industrialized countries could tum turn couldn’t could be allowed to satisfy their reduction requirements by getting credit for reductions that were going to occur anyway in developing countries countries and since the developing countries have no budget there could be no offsetting reduction of their budgets Isn't Isn’t that right that right So who will decide that those reductions are more than would have occurred anyway and how how will will they they decide decide that that • How will the CDM be administered Are we going to create yet another international institution Who will control it •• You joint implementation but JI You say say that that this this idea idea is is in in effect effect the the same same as as our our idea idea for for joint implementation but JI would have operated on a company to company basis without new international bureaucracies while bureaucracies while the the CDM CDM will will require require aa new new bureaucracy bureaucracy right right Sovereignty Enforcement •• Won't U S Won’t this Protocol inevitably inevitably come come to to impair impair U S sovereignty sovereignty • won't we inevitably be turning over decisions about American energy Under the Protocol won’t usage and therefore the American economy to international bodies dominated by the developing countries perhaps acting in concert with the EU • What verification procedures are there to ensure that other countries honor their obligations obligations •• How How will will the the Protocol Protocol be enforced enforced Either Either itit will v«ll be be an an honor honor system system without without any any real real in which case the United States will get taken advantage of as we honor enforcement enforcement in which case the United States will get taken advantage of as we honor our our obligations while others ignore their own or there will be a real enforcement system in which bureaucracies will judgment on which case case international international bureaucracies will be be able able to to sit sit in in judgment on whether whether we we are are meeting meeting our our obligations obligations Which Which will will itit be And And aren't aren’t both both these these alternatives alternatives unacceptable unacceptable National Security • • By By agreeing agreeing to to include include all all domestic domestic military military operations operations and and training training in in our our emissions emissions budget haven't haven’t we forced ourselves to limit these operations in order to meet our target • The Protocol only exempts U S U S military exercises that are multinational and humanitarian Won't Won’t that will inevitably put pressure on us to limit unilateral military action such as in Grenada Panama or Libya • Why didn't didn’t you just insist on a clearcut exemption of military emissions as the Pentagon clearly wanted rather than the flawed formula you accepted Rogue nations • Why doesn't doesn’t the Protocol exclude rogue nations like Iran Iraq or Libya Do you think they should be able to benefit from this Protocol Entry into force • Why did you agree to a provision that will allow this Protocol to go into effect all over the world without U S U S ratification Didn't Didn’t you in effect intentionally diminish the role of the Congress Congress Developing countries • Before Kyoto the President and Vice President both said we would walk away from a bad deal and emphasized that developing country participation was essential You then went to Kyoto and got nothing from developing countries Why didn't didn’t you keep your word and walk away • The Administration has admitted repeatedly that a deal omitting developing countries will fail because developing countries will soon overtake developed countries as the largest emitters In light of that isn't isn’t it foolish to enter into a deal that omits the developing countries • The fatal error in this negotiation was the Berlin Mandate which completely let the developing countries off the hook Shouldn't Shouldn’t we have just let this Kyoto process fail and started over on a sounder footing As you have said this is a problem that must be resolved over decades so why get going on the wrong foot •• How How can can you you expect expect to have any negotiating leverage on developing countries when the developed countries agree to stringent targets first getting nothing in return from developing countries What real incentive do developing countries now have to agree to tough limits of their own • You went into the Kyoto conference with vith very low expectations regarding developing countries -— just seeking a provision that would have allowed individual developing countries to opt in to the Protocol voluntarily Even that modest provision was denounced and defeated In light of that reception by the Chinese Indians Brazilians and others isn't isn’t it self-delusion to think that you will draw the key developing countries into the Protocol even in the next few years • What is your strategy for getting developing countries to participate in the Protocol •• What constitutes meaningful “meaningful participation participation ” • Given the lack of incentive for developing countries to participate and the lack of leverage over them won't won’t it be years before we can expect enough key developing countries to participate If so won't won’t it be years before the Protocol is ready to be submitted to the Senate by your own standard own standard And if years do pass won't won’t it in effect become impossible to achieve the target you have accepted accepted in in the the 2008-2012 2008-2012 period period • • The purpose of the voluntary opt-in provision Article 10 was to allow developing countries to join the Protocol if they wanted to Since that provision was soundly defeated isn't join the Protocol even if they isn’t it the case that developing countries may not o n want to Sisning Ratification Signing Ratification • When do you expect the President to sign the Protocol •• When do you expect the President to submit the Protocol to the Senate for its advice and consent consent • By refusing to submit the Protocol to the Senate promptly after signing it isn’t isn't the President disregarding the Senate's Senate’s appropriate constitutional role of advice and consent Domestic program • Isn't Isn’t the President's President’s domestic program -- such as the $6 3 billion budget package he recently announced -- just a way of implementing the Kyoto agreement without getting the advice and consent of the Senate • Is the Administration planning any steps designed in effect to implement the Kyoto agreement by Executive Order Economics Economics • In would be be 34% 34% higher higher in in 2010 2010 than than 1990 and In aa business business as as usual usual scenario scenario energy energy use use would 1990 and we've we have have to to be be 41% 41% lower lower than than where where we’ve agreed agreed to to aa target target of7% of 7% below below 1990 1990 So So we we'd otherwise be That is a wrenching change -how can you seriously believe we could we’d otherwise be That is a wrenching change - how can you seriously believe we could achieve increases to to depress depress demand demand achieve that that without without rationing rationing or or huge huge price price increases • Have what it it would would cost cost our our economy economy to to meet meet the the Have you you done done economic economic analysis analysis to to show show what target in the Kyoto Protocol In price per ton of carbon In jobs lost In GDP lost If target in the Kyoto Protocol In price per ton of carbon In jobs lost'i’ In GDP lost If not not why why not not If If so so what what do do your your numbers numbers show show • Have impacts on by sector basis so we can can see Have you you done done an an analysis analysis of of economic economic impacts on aa sector sector by sector basis so we see which industrial energy energy producing producing or or agricultural agricultural which sectors sectors of of the the economy economy -- whether whether industrial will will be be hard hard hit hit • Does for those those industries industries that that would would be be hardest hardest Does the the President's President’s plan plan make make any any provision provision for hit hit • Questions very serious job impact impact on on six Questions based based on on the the Argonne Argonne Study Study showing showing very serious job six energy energy intensive intensive industries industries • From target like below 1990 by From an an economic economic standpoint standpoint isn't isn’t aa stringent stringent target like 7% 7% below 1990 levels levels by 20089-2012 exactly the wrong way to go Wouldn't it be much better for the economy to 20089-2012 exactly the wrong way to go Wouldn’t it be much better for the economy to capital stock could be be turned turned over over in in aa more more phase phase the the changes changes in in more more slowly slowly so so that that capital stock could to be turned over too rapidly natural way rather than forcing such stock natural way rather than forcing such stock to be turned over too rapidly In result would would be be more more or or less less the the In fact fact don't don’t studies studies indicate indicate that that the the environmental environmental result same moved more more gradually gradually at at first accelerated same whether whether you you started started very very quickly quickly or or moved first and and accelerated economic result would be much better following the the pace later but that the the pace later but that the economic result would be much better following the second second approach approach • Isn't just designed things at no taxes taxes etc -- only only to to Isn’t your your approach approach just designed to to sugar-coat sugar-coat things at first first -- no etc then trade emissions emissions program program starting in 2008 2008 then slam slam on on the the brakes brakes through through aa cap cap and and trade starting in Given the fact that you aren't relying on any price signal before 2008 isn't the cap and and Given the fact that you aren’t relying on any price signal before 2008 isn’t the cap trade produce very very high high prices prices per per ton ton of carbon in in trade system system that that starts starts in in 2008 2008 going going to to produce of carbon order to meet our Kyoto target order to meet our Kyoto target • Isn't just another another name name for energy tax tax The The Isn’t aa domestic domestic emissions emissions trading trading system system just for an an energy bottom will pay pay higher higher energy energy prices prices than than they they bottom line line will will be be exactly exactly the the same same consumers consumers will otherwise would right otherwise would right • Questions million jobs jobs lost lost 50 cent gallon increase increase in in Questions about about various various studies studies that that show show 22 million 50 cent gallon gas of four four etc etc gas prices prices $2000 $2000 increase increase in in energy energy bills bills for for aa family family of • DOE' doe’ss Five Five Labs Labs study study depends depends on on an an increase increase of of $50 ton $50 ton of carbon in order to meet a goal less stringent than the one you've accepted goal less stringent than the one you’ve accepted --- and and DOE's DOE’s report is based on a lot of optimistic assumptions about technology development optimistic assumptions about technology development So So isn't isn’t a number of around $50 ton carbon -which would would mean mean about $50 ton of of carbon - which about 12 12 cents gallon cents gallon of gas or $x in increased energy prices for a family of four -about as low a we could rationally predict to energy prices for a family of four - about as low a cost cost as as we could rationally meet meet our our Kyoto Kyoto target target • Other Other Orszag Orszag QS QS Science Science • Questions Questions from from Rosina Rosina on on uncertainty uncertainty of of science science